Sellers Are Now Lowering The Price Themselves

A report from the Seattle Times in Washington. “Earlier this week the news was that the average Seattle-area homebuyer has been successfully able to negotiate a deal at below list price for the first time in four years. But that’s only half the story: In a lot of cases, sellers are now doing the work for buyers by lowering the list price themselves.”

“At the start of the spring, when the local market was still on fire, just 5 percent of all homes on the market in the metro area had a reduced listing price, according to Zillow. Now, 22 percent of all listings are being pitched at a reduced price, the most since Zillow began tracking the data in 2010.”

“Take a newly remodeled four-bedroom home just northwest of Green Lake that went on the market in mid-September for $950,000. The flipper who gutted and renovated the home must not have gotten any nibbles because within a week, the price was down to $899,950. A couple weeks later, it was down to $879,950. Still nothing. Another couple of weeks and it sank to $859,950. Another two weeks and they tried $839,950. Nope. This week it went back on the market at $799,995.”

“But it’s not just sellers of pricey homes who are setting their sights lower. A small house in Rainier Beach, one of the cheapest on the market in the city right now, just had its asking price lowered for the third time — from the original $367,950 to $335,000 now — and the owner is throwing in a $5,000 closing credit.”

“Realtors aren’t being bashful about the changes. ‘Seller says get it sold!!! So just reduced the price,’ reads an ad for a West Seattle house whose owner has cut its price three times, by a total of $50,000.”

“‘HUGE PRICE REDUCTION!!!’ says an ad written in caps-lock. ‘Come take advantage of this Amazing deal and walk into Instant Equity!’ says a listing for a Carnation home with reduced price.”

“And a home in Auburn: ‘Buyers, please read. We’ve drastically lowered our price! If you’re a serious buyer this is your opportunity to save some money and get a beautiful, quality and spacious home ‘under’ market value. The home is priced under both Redfin’s and Zillow’s estimates. So, please call to schedule a showing because at this price point the home may not last long on the market.’ The home’s price cut — its fourth — was three weeks ago, and it’s still on the market.”

“The average sellers cutting their list price here have reduced it by 3 percent, the same as the national average. In the city of Seattle and the Eastside, that translates to a cut of about $25,000 to $30,000.”

“But here is a bucket of cold water in the face of anyone thinking Seattle is suddenly a great place to buy a house. The fact remains that Seattle has some of the most expensive real estate in the country, and the changes in recent months haven’t put much of a dent in that.”

“Just to hammer that home: Five years ago, the median house in Seattle cost $461,000. It peaked this spring at $830,000 — an 80 percent rise over five years. The median price has since dropped down to $775,000 — reducing the total five-year increase to 68 percent, still a huge amount.”

The San Francisco Chronicle in California. “A year after hitting the market at $12.5 million, San Francisco’s largest estate is still up for sale and this week the price was dropped to $5.5 million. Could this magnificent and quirky property tucked away on Chenery Street now be the city’s best deal?”

“Listing agent Joel Goodrich says that even in San Francisco’s competitive housing market where prime properties sell fast and for over asking, unique properties like this requires the right buyer and can take time to sell.”

“‘Since we’ve reduced the price we’ve gotten tremendous interest and it’s going to be a great opportunity for someone to buy a unique San Francisco property with great potential,’ says Goodrich.”

‘a newly remodeled four-bedroom home just northwest of Green Lake that went on the market in mid-September for $950,000. The flipper who gutted and renovated the home must not have gotten any nibbles because within a week, the price was down to $899,950. A couple weeks later, it was down to $879,950. Still nothing. Another couple of weeks and it sank to $859,950. Another two weeks and they tried $839,950. Nope. This week it went back on the market at $799,995’

“The number of home flips, defined as a home bought and sold within the same 12-month period, fell 18 percent nationally in August, compared with August 2017, according to ATTOM Data Solutions. Flipping volume has been falling annually by double-digit percentages for three of the past six months.”

“Realtors aren’t being bashful about the changes. ‘Seller says get it sold!!! So just reduced the price,’ reads an ad for a West Seattle house whose owner has cut its price three times, by a total of $50,000.”

How’s that affirmation working out for you, oh it’s not? But you said “get it sold” you slashed your price, what more will it take?

Same goes for this listing that has dropped 200k+ and went from pending back to on the market with yet another price reduction “seller says sell”. Doesn’t seem to be working…

OT… About a week ago, the WSJ reported that the DOJ was investigating Tesla. Musk denied it in a recent interview. But lo and behold, in an SEC filing today, Tesla confirmed the DOJ and SEC are both investigating Musk/Tesla claims about Model 3 production.

Note that this property is not currently served by the water or sewer systems. Just like all the older homes sprinkled throughout this area (that are being surrounded or replaced by modern tracts). Thus the well and septic tank.

Wowza. That’s unusual for SoCal because the region blew past the last peak years ago. (I mean if a listing was $1mil in ’07, it’s $2.2m today.) Have there been more like this in Palm Springs (ie can’t even hit the ’07 price?)

Yes, starting to see that more and more. Maybe people who bought in 06-07 who were underwater can FINALLY can try and get out?

Remember – Palm Springs is an outside market to LA so these things always start at the coast and head inland, then reverse course as the crash accelerates.

Another interesting phenomenon I watched from ’10ish-’14ish.

A lot of Canadians owned vacation homes in Palm Springs. Back when the USD/CAD was at parity they picked up some great deals (’10-’12). When the USD started to get strong, Canadians started dumping their shacks because their carrying costs (taxes, HOA, maintenance, etc was increasing in CAD).

A lot of these shacks were picked up in ’14-’16 (also right around when AirBnB was becoming popular) These guys would slap in upgrades and then rent them out. As AirBnB proliferated more, Palm Springs continually clamped down on vacation rentals – now to the point where you can’t even have outdoor amplified sound of any time, strict parking and occupancy requirements, etc. I know this because my friends and I rent a house for 4th of July every year in PS.

Now these ’14-’16 shacks are being put on the market for 1.5-2x their original purchase price.

One more thing – there’s a collection of condos up in the north part of town. They are small 500sq ft 1 bedrooms that were going for as low a $40-50k back 2010-2011. About two years ago they were going for 70-90k. Those look like they were scooped up by flippers because now a flood of these units are on the market from $110-135k with some “upgrades.”

BTW – These same condos originally sold in 1980 for — $45k! I saw one that then sold in 1997 for 25,5k! If you look around ones sold in the mid 2000s… you guess it – around $100k.

Thanks for the info, interesting market. The price vacillations are amazing, esp to think how much money was lost to this unproductive flipping for years. So how many groups of Greater Fools so far? There are the people who bought at the top in 07, then the Canadians, then the Airbnbers, then the flippers. Yikes.

And condos that sold in 2011 for what they sold for in 1980? Pretty incredible.

“Five years ago, the median house in Seattle cost $461,000. It peaked this spring at $830,000 — an 80 percent rise over five years.”

If data had been reported this way anywhere but HBB over the last five years, the rebubble’s expansion would have been severely constrained. Reading something like this in a mainstream outlet would make almost any buyer think twice.

But instead, until basically yesterday, mainstream outlets reported in the style of single-digit mom/yoy gains – up x% this year. And anyone pointing out that housing had basically doubled in five years (or up 50% in two years back in 2012-14, for example) was a bubble-talking prosperity-denying buzzkill.

>>Take a newly remodeled four-bedroom home just northwest of Green Lake that went on the market in mid-September for $950,000. The flipper who gutted and renovated the home must not have gotten any nibbles because within a week, the price was down to $899,950. A couple weeks later, it was down to $879,950. Still nothing. Another couple of weeks and it sank to $859,950. Another two weeks and they tried $839,950. Nope. This week it went back on the market at $799,995.”

I absolutely LOVE seeing these flippers get crucified. They are just a bunch of greedheads throwing lipstick on a pig for a quick buck, and a massive part of the problem insofar as skyrocketing house prices go. They have been buying and selling to each other for years. The music just stopped and now they’re all screwed, blued and tattooed.

Jeff Bezos said “there are two kinds of companies: those that work to try to charge more and those that work to charge less.”

Flippers ostensibly work (this is debatable) to charge more. The problem is that people actually want someone who will work hard to charge less. Where is that business model in housing? It doesn’t exist. Where are the entrepreneurs trying to figure out how to house people for less?

I found the house. They paid $585,000 on 4/20 (they must have been really high). They essentially bought at the absolute pinnacle. We’ll never know how much they have into their “flip,” but I think I’m going to watch this one rot away on the mls.

Looks like they cut away the roof and part of the upstairs in order to create an outdoor patio – in an area with 9 months of dismal weather no less. Absolutely braindead move. Heated square footage is much more valuable, especially in a small house, than outdoor space.

“Just to hammer that home: Five years ago, the median house in Seattle cost $461,000. It peaked this spring at $830,000 — an 80 percent rise over five years. The median price has since dropped down to $775,000 — reducing the total five-year increase to 68 percent, still a huge amount.”

OWWEEEEEEE!!! The peak buyers of the median house just lost $55,000 in equity, and that doesn’t even count the 6% closing costs. The Spiffster is hemorrhaging “equity!”

the San Francisco Chronicle in California. “A year after hitting the market at $12.5 million, San Francisco’s largest estate is still up for sale and this week the price was dropped to $5.5 million…”

I was going to say that’s a huge single price drop but you know what? If you don’t have 1 million dollars, 12 million and 5 million are functionally the same. Until it drops down to actual levels someone can afford, it doesn’t even count as a price cut.